Cashless society
A cashless society describes an economic state where financial transactions are not conducted with money in the form of banknotes or coins, but rather through the transfer of digital information between the transacting parties. Cashless societies have existed and cashless transactions have been possible using digital currencies such as bitcoin. However, this article discusses and focuses on the term "cashless society" in the sense of moving towards, and implications of, a society that is replaced by the digital equivalent, in other words, legal tender (money) still exists, is recorded and exchanged only in electronic digital form. Such a concept has been discussed widely, particularly because the world is experiencing a rapid and increasing use of digital methods of recording, managing and exchanging money in commerce, investment and daily life in many parts of the world and transactions which would have been historically undertaken with cash are now undertaken electronically. Some countries now set limits on transactions and transaction values for which non-electronic payment may be legally used. History The trend towards the use of non-cash transactions and settlement began in daily life in 1990s, when electronic banking became popular. By the 2010s, digital payment became more widespread in many countries, with examples such as PayPal, digital wallet schemes such as Apple Pay and Android Pay, contactless or NFC payments like smartphone, and electronic bills and banking, all in widespread use. By the 2010s, cash had become actively disfavored in some kinds of transaction which would historically have been very ordinary to pay with physical tender and larger cash amounts were in some situations treated with suspicion, due to its versatility and ease of use in money laundering and financing of terrorism, and actively prohibited by some suppliers and retailers, to the point of coining the expression of a "war on cash". By 2016 in the United Kingdom it was reported that 1 in 7 people no longer carries or use cash. The 2016 United States User Consumer Survey Study claims that 75% or respondents preferred a credit or debit card as their payment method while only 11% of respondents preferred cash. By 2017, digital payment methods such as Venmo and Square contribute to cashless transactions. Venmo allows individuals to make direct payments to other individuals without having cash accessible. Square is an innovation that allows primarily small businesses to receive payments from their clients. Concerns It has also been described as a highly controversial and at times "sinister" and "creepy" move and as a concept compared to the negative interest rates, banking transaction tax and global taxation regime. since such a move would be both potentially useful and potentially socially dangerous, with widespread implications for society. It has potential to be very helpful for central governments and economies, in the context of global negative inflation and quantitative easing, and central control of the money supply. However a loss of cash also transfers complete control of transactions, interest, and individual use of money, and information about these, to the nation state and third party providers, since the individual cannot avoid their money being held in an external system capable of regulation and control. Many countries have regulated, restricted, or banned private digital currencies such as Bitcoin. While supposedly helpful to the global economy and in fighting against crime and terrorism, many concerns have been raised over "dangerous" unintended consequences. It would mean that negative interest rates can be fully enforced, and money could be controlled in great detail. For example, some kinds of money might be set to "expire" and be worthless if not spent in specific ways or by specific times, or to devalue gradually. It also makes individual savings, and information about individual incomes and transactions, accessible to any party able to access the records - either legitimately (police and tax related) or not (hackers and persons with access to the relevant data), and in this way, it facilitates population surveillance. It also means that groups, individuals, and causes could be deprived of cash by the simple expedient of preventing their access to cashless transaction media. A cashless society is convenient and fast; however, it also increases ignorance to individual spending and vulnerability to fraud. Consumers' ignorance to spending increases as they are less aware when swiping their card to complete a transaction than if they budgeted their money and paid in cash. Their vulnerability to fraud increases because corporations keep record of credit and debit card transactions, but they don't keep a record of cash transactions. The two main types of credit card fraud are when thieves attain the data manually or through a concealed automated program. Advantages Efficient and convenient Going digital, it helps to reduce the hassle of drawing cash or making sure that cash-in-hand is sufficient to make a payment in places where only cash is allowed. With a digitalized payment system, it speeds up the process of financial transaction and boosts the efficiency of the transaction. Increased transparency As monetary transactions are being made electronically, it increases the transparency as financial transaction is recorded. The cashless system will assist a wide range of institutions and these includes: Government bodies Rather than conducting costly and periodic surveys and sampling of real-world transactions, real data collected on citizen spending can assist in devising and implementing policies that are deduced from actual data. With recorded financial transactions, Government can better track the movement of money through financial records which enables them to track the black money and illegal transactions taking place in the country. Businesses Cashless payments would eliminate the fear of businesses receiving counterfeit money and flush out illegal cash. The risks of storing cash will also be reduced as payments are made digitally. Easier tracking As digital payments are made, transactions are kept in records. Cashless payments facilitate the tracking of spending expenditure and record the movement of money. Having recorded transactions, it can help citizens to refine their budget more efficiently. Perils Privacy issues In a digitized economy, payment made will be traceable. With traceable transactions, institutions would have potential access to this information. With these digital traces left behind, digital transactions become vulnerable. Such transactions allow businesses a way to build a consumer’s personal profiles based on their spending patterns. The issue of data mining also come into place as countries head towards a cashless society. Cashless transactions leave a record in the database of the company as one make payment, and this information becomes a way for prediction of future events. Through large number of records, data mining then allows the organization to compile a profile of an individual through its' records in the database. Going all digital, these data retrieved from transactions lead to widespread surveillance where individuals can be tracked by the corporation and the state. Exclusion of certain population Implementing cashless system exclude the involvement of certain population such as the poor or near poor and the older generation. Heading towards a cashless society, citizens that does not hold the power or knowledge of engaging in digital transactions are left behind. To be able to transact using e-payment, it requires one to hold a bank account, which can hold their money. For the older generation, especially retired seniors who are less familiarised with technology and digital applications, it will be hard for them to adopt the digital system. One of such example would be Singapore. As a Smart Nation Initiative, Singapore has been moving towards a cashless system. In Singapore, there are at least half a million elderlies, aged 65 and above, and this accounts for 14.4 percent of the total population in Singapore. Most seniors in Singapore still use cash as their only mode of payment and the integration of cashless payment creates a barrier for them. Not used to digitized payment methods, troubleshooting issues such as managing lost cards or passwords and managing their expenses can create potential troubles for these elderlies. Breaching/Hacking of the System When payment terminals are stored on the servers, it increases the risk of unauthorized breachers and hackers. Financial cyber attacks and digital crime also form a greater risks when going cashless. One of such example would be Forever 21, whom released a statement reporting the findings from their investigation of a payment card security incident. In 2017, Forever 21 encountered a breached of their payment system by hackers for 7 months. As the encryption in some of their point-of-sale terminals were not on, it opened up their point-of-sales terminal to malware. The hackers obtain the network access and installed malware that allowed them to retrieve the card details of Forever 21’s consumers. Due to this invasion, the hackers obtained access to consumers’ payment card data for up to seven months - from 3 April 2017 to 18 November 2017. These open transactions also create the dangers and security issues where unauthorized access to users’ account occurs and funds are transferred to another account or unauthorized purchases are made by unknown user as they pose as the true user.